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The Galaxy Resources Limited share price falls on disappointing quarterly update

Lithium miner Galaxy Resources Limited (ASX: GXY) started the week down 4.46% to $2.90, after releasing a disappointing quarterly activities report for the first three months of 2018.

The quantity of ore treated at Galaxy’s Mt Cattlin project in Western Australia increased 4% over the previous quarter, but resulted in a smaller production of lithium concentrate – 44,000 dry metric tonnes (dmt), down 16% from the December 2017 quarter. Production cash costs increased 28%, to US$415 per dmt.

It is the first stall in the miner’s production after three consecutive quarter-on-quarter increases in FY2017. The company is upgrading the Mt Cattlin processing plant in order to lift annual production volumes to between 220,000 and 240,000 dmt. Galaxy is also about to start drilling in its Argentinian Sal De Vida project, and continues its feasibility assessment of the James Bay project in Canada.

The company remains confident that future developments in the electric vehicle industry will sustain demand for lithium, a key component in electric batteries.

Galaxy is one of the most shorted shares on the ASX this week, as analysts expect an increase in lithium supply from Australia and Argentina to cause the price of the metal to drop significantly in the next few years.

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Motley Fool contributor Tommaso Autorino has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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